iheartradio layoffs

[Mark Roberts]

As for the broader picture, what we're seeing now started back in the 1980s when stockholders like T. Boone Pickens began demanding that corporations give them higher dividends instead of employees higher pay and benefits. In most cases, the old-style pension plans were replaced with 401(k)'s where both the employer and employee contributed to the employee's retirement investment, with the employer contributing a whole lot less than it used to.

That was due predominantly to longer life spans and lots more job changing by the labor force.

A factor not often recognized is stricter financial auditing requirements. Beginning a couple of decades ago, companies were required to account more fully for the ongoing costs of defined-benefit plans, i.e. pensions (and of medical coverage for retirees), and were also required to disclose the assumed rate of return for their pension plans. In many cases, this sharply increased the costs of those plans as shown on balance sheets. This hit final-income schemes (such as basing the pension on the highest or final three years of income) particularly hard. Cash-balance pensions were less affected -- and were more portable for employees -- but still represented a cost. The only corporate costs for a defined-contribution plan (i.e. 401(k) and the like) are whatever corporate contributions are made plus whatever the company chips in for the costs of the plan.

401(k) plans originally started out as simple salary-deferral plans with no intention for use as retirement plans. But companies gradually shifted to them and they, along with old-style after-tax "thrift plans", evolved into what we have today.

A comparison with public-sector pension plans, still common for state and local governmental employees, can be instructive. (Federal employees are covered by a 401(k)-like defined-contribution plan with a small backup.) The audit requirements that apply to private-sector plans generally don't apply. Moreover, rate-of-return assumptions are less realistic, sometimes upwards of 7% or 8% per year. The plans have promised more than they can deliver. Consequently, this is why quite a few state and local governmental pension plans are having financial challenges. It's also why some of them are making very risky investments with private equity in the hopes of reaching or exceeding those rate-of-return assumptions, at the additional cost of poor liquidity. For 401(k) plans, the participants (employees) are solely responsible for figuring out how to get a reasonable rate of return. Many are not equipped to do so, which is a significant drawback to how retirement plans have evolved. But 401(k) plans aren't nearly as much of a drag on a balance sheet as defined-benefit plans, nor do companies incur nearly as much liability for results as long as reasonable investment options are provided.

iHeart actually does contribute to its employees' 401(k) accounts, though contributions were suspended in 2023 and 2024. They were resumed this year. The match is 2.5% of income to a maximum of $5,000 each year. I'd give that a C-minus grade -- I can't refine that further since I don't know whether iHeart covers recordkeeping and administrative costs, or whether some or all of those costs are charged to participants (which is a legal practice, though it chews into investment gains); nor do I know what kinds of investment options are available. So what's described here may or may not apply in specific circumstances, depending upon the provisions of a company's plan. Summary plan descriptions are informative but can be hard to find online.

 

[davideduardo]

A factor not often recognized is stricter financial auditing requirements. Beginning a couple of decades ago, companies were required to account more fully for the ongoing costs of defined-benefit plans, i.e. pensions (and of medical coverage for retirees), and were also required to disclose the assumed rate of return for their pension plans. In many cases, this sharply increased the costs of those plans as shown on balance sheets. This hit final-income schemes (such as basing the pension on the highest or final three years of income) particularly hard. Cash-balance pensions were less affected -- and were more portable for employees -- but still represented a cost. The only corporate costs for a defined-contribution plan (i.e. 401(k) and the like) are whatever corporate contributions are made plus whatever the company chips in for the costs of the plan.

Good explanation of a further change that affected retirement plans and planning. Add in the high cost of money in several multi-year periods since the related “oil crisis” of the 70’s as well as a plethora of “growth” company shares that paid no dividends and the ease of administering in-house plans was decreased.

401(k) plans originally started out as simple salary-deferral plans with no intention for use as retirement plans. But companies gradually shifted to them and they, along with old-style after-tax "thrift plans", evolved into what we have today.

I recall having a company “savings” plan in the mid-70’s in my radio division of a larger supermarket chain. It was just a simple way to “not see - not spend” at the time.

A comparison with public-sector pension plans, still common for state and local governmental employees, can be instructive. (Federal employees are covered by a 401(k)-like defined-contribution plan with a small backup.) The audit requirements that apply to private-sector plans generally don't apply. Moreover, rate-of-return assumptions are less realistic, sometimes upwards of 7% or 8% per year. The plans have promised more than they can deliver. Consequently, this is why quite a few state and local governmental pension plans are having financial challenges.

In particular, plans that were “aggressive” in the 2008 recession had their shortfalls amplified by enduring losses.

It's also why some of them are making very risky investments with private equity in the hopes of reaching or exceeding those rate-of-return assumptions, at the additional cost of poor liquidity.

And we see lots of investments that are far distanced from traditional stocks and bonds.

For 401(k) plans, the participants (employees) are solely responsible for figuring out how to get a reasonable rate of return. Many are not equipped to do so, which is a significant drawback to how retirement plans have evolved. But 401(k) plans aren't nearly as much of a drag on a balance sheet as defined-benefit plans, nor do companies incur nearly as much liability for results as long as reasonable investment options are provided.

The bulk of eligible people can not differentiate between fixed income, dividend driven and market gain alternatives. They end up with a ton of low yield bonds that do not keep pace with inflation.

 

[K.M. Richards]

The bulk of eligible people can not differentiate between fixed income, dividend driven and market gain alternatives. They end up with a ton of low yield bonds that do not keep pace with inflation.

I have a significant amount invested in stock index funds. While I am not getting rich with them, they are a relatively safe investment and I stay a bit ahead of inflation (which is more than I can say for most high-yield savings accounts ... although I do have one of those to keep some of my funds liquid, just in case). As long as they are preserving buying power at whatever point I cash out, they are worth the investment.

The two best performing funds track the S&P 500 and companies in the more profitable industries. The next best performing track stocks with better than average dividends.

I also keep a money market account at my credit union with a decent interest rate, but I try to keep its balance around the total of one year's rent plus $10,000.

 

[davideduardo]

I have a significant amount invested in stock index funds. While I am not getting rich with them, they are a relatively safe investment and I stay a bit ahead of inflation (which is more than I can say for most high-yield savings accounts ... although I do have one of those to keep some of my funds liquid, just in case).

We try to keep cash, despite low yields, in sufficient amounts to sustain us through another period like the 2008 recession. We are not so extreme as to be stashing gold bars under the foundation of the house or digging silos in the backyard, but find that there is extreme value in knowing that we have a good margin of safety.

As we both lived in Latin America, economic security in the event of a downturn is a key motivator.

As long as they are preserving buying power at whatever point I cash out, they are worth the investment.

The two best performing funds track the S&P 500 and companies in the more profitable industries. The next best performing track stocks with better than average dividends.

I also keep a money market account at my credit union with a decent interest rate, but I try to keep its balance around the total of one year's rent plus $10,000.

My very simple question: how many people in broadcasting, and in radio in particular, have investments to the level that you have been able to achieve?

 

[K.M. Richards]

My very simple question: how many people in broadcasting, and in radio in particular, have investments to the level that you have been able to achieve?

Admittedly, I have been fortunate on several levels to be able to have "put away" so much over the years. First, since most of my years on the air and being an in-house PD were in my home market, I was able to keep my room in the house I grew up in (and help out my mother and grandmother in the process) until my mother went into managed care in her 80s ... at which time I was not living there, so we sold the house right at a peak in the real estate market and put the proceeds into a trust fund.

So I was able to open the investment account for the index funds when I was still young enough to enjoy watching it grow. (It is at the same firm at which my mother had a similar investment account, and she was able to put away a decent amount of her state employee pension there over the years.)

When my mother passed away in 2009 (just two weeks short of her 91st birthday!) I was the sole inheritor of what was by then a living trust. The bulk of it, by the terms of the trust, went into lifetime annuities that guarantee me about $2200 a month. While it does not adjust for inflation, it is comforting to know it will be there every month until I die, regardless of how much its spending power is. Even so, those annuities cover all my regular monthly expenses, including my recurring business expenses such as my Mediabase subscription.

The percentage of the trust that was lump sum was the original funding of my money market account and I subsequently transferred a significant portion of that into my index funds' holdings. (I still do when it goes over a certain balance.)

I also collect Social Security and that is direct deposited into the money market account. Other than the credit union e-mail telling me it was added I really don't think about it much. I may be one of the few people in the United States who would not be "hurt" much if the doom-and-gloom predictions about SS come to pass.

As I said, I have been fortunate ... and I have also been smart with my money over the decades. Sadly, I see your point about very few people in our industry being able to get much beyond living paycheck to paycheck.

 

[Mark Roberts]

Good explanation of a further change that affected retirement plans and planning. Add in the high cost of money in several multi-year periods since the related “oil crisis” of the 70’s as well as a plethora of “growth” company shares that paid no dividends and the ease of administering in-house plans was decreased.

I recall having a company “savings” plan in the mid-70’s in my radio division of a larger supermarket chain. It was just a simple way to “not see - not spend” at the time.

I've researched the topic, and it appears that what were often called "thrift plans" dated back at least to the 1930s. One complication in research is that "thrift plan" had a double meaning. It could either refer to a small loan paid back on an installment plan, or to an employer-sponsored savings plan, which is what I'm referring to here. It appears that oil companies were among the first to offer savings plans to their employees, with other large companies following later.

Hallmark Cards had one that dated back to 1957. If you contributed 5% of your pay, Hallmark would chip in an additional 1% of pay. Account growth and company contributions were tax-deferred. Tax-deferred profit-sharing plus a small pension was the mainstay of Hallmark's retirement program; the thrift plan was considered supplemental. I remember asking one of my senior colleagues whether I should participate. She said, "Do it. You won't miss the money." When 401(k)s became more common a group of employees, including me, lobbied for one. The pre-tax option was finally added in 1994. The whole program was converted to a 401(k) with profit-sharing features eight years later.

KTRH had a savings plan when I was there, and I participated. This caused some administrative headaches for them when I was fired. I ended up getting more from it than originally anticipated because they hadn't fully worked out vesting provisions for company contributions, it appeared. At least that compensated a little bit for the fact that I didn't get any severance.

The bulk of eligible people can not differentiate between fixed income, dividend driven and market gain alternatives. They end up with a ton of low yield bonds that do not keep pace with inflation.

Heck, most people don't even understand compound interest. Personal finance education is something that our educational system does not do well. It should be mandated. To be fair, it is now a requirement in 28 states. What I haven't seen is any evaluation of the quality of instruction in such courses, nor an indication of how deep they go. Particularly in "progressive" circles, the notion of successful investing seems to have a bad odor, which I think is unfair and flat-out unhelpful.

Some companies are good about offering retirement planning sessions. Hallmark was very good at this. It was where I learned some of what I know today on the subject. What really supercharged my knowledge was going to work for a brokerage. All I really had to do was to pay attention to the business I was supporting. The company offered educational resources to clients which employees could use, too.

I seem to have an affinity for the subject, so that helps, too.

I have a significant amount invested in stock index funds. While I am not getting rich with them, they are a relatively safe investment and I stay a bit ahead of inflation (which is more than I can say for most high-yield savings accounts ... although I do have one of those to keep some of my funds liquid, just in case). As long as they are preserving buying power at whatever point I cash out, they are worth the investment.

While I'm not a big fan of efficient-markets theory -- which I think totally ignores the roles of irrationality, emotion, and herd behavior in the markets -- one good thing it produced were index funds and ETFs. I prefer ETFs these days for the wider choices and greater flexibility they offer compared to mutual funds, but there's absolutely nothing wrong with index mutual funds, either. Indexing has become so popular that some funds and ETFs that purport to follow an index are really actively managed (in other words, their "index" is invented and proprietary), so you do have to be a little careful there.

I won't go too much into details on the subject, but I believe the key concepts of investing are asset allocation and diversification, combined with watchful patience, so I hold a mix of assets.

My very simple question: how many people in broadcasting, and in radio in particular, have investments to the level that you have been able to achieve?

I can't answer that question because my solution was to get out of broadcasting!

 

[K.M. Richards]

Indexing has become so popular that some funds and ETFs that purport to follow an index are really actively managed (in other words, their "index" is invented and proprietary), so you do have to be a little careful there.

My index funds are at the company that invented the mutual index fund (hint, hint), and they properly disclaim that they do actively manage them, but they waive the fees for that management if you go paperless on your statements.